ACIT vs. Dhampur Sugar Mill Pvt. Ltd (ITA No 220 of 2014 dated 05.11.2014) (Allahabad High Court) Background: The assessee is engaged in the business of the manufacture and sale of sugar, chemicals and power, and has a distillery. For the FY 2007-08, the assessee had incurred interest on working capital which was debited to P&L A/c. During the course of assessment proceedings, the AO observed that assessee had invested some of its funds in shares and the dividend income which had been or was receivable on these investments did not form part of the total income. Holding that certain expenses, such as on account of interest, were directly attributable to the exempt income, the AO made disallowance of Rs 67.75 lakhs under section 14A.
Monthly Archives: November 2014
ACIT v Smt. Cecilia Haresh Chaganlal [ITA NO. 2661/Mum/2013 dated 05.11.2014] (Mumbai ITAT) Background: The assessee is an individual and a senior citizen of 80 years age. Assessee filed the return of income declaring long term capital gains on sale of paintings and the same were offered to tax at the normal tax rate of 20% applicable to the long term capital gains under the Act. Thereafter, the assessee filed revised return wherein the aforesaid long term capital gains are offered to tax at the concessional tax rate of 10% under proviso to sub section (1) of section 112 of the Act. The AO held that assessee has made a wrong claim in the revised return by offering the impugned capital gains at 10% tax rate instead of 20% tax rate and thus, furnished inaccurate particulars of her income in respect of the sale of paintings. Accordingly, the A.O. initiated penalty proceedings and imposed penalty u/s. 271 (1 )(c) of the Act. The CIT(A) was satisfied with the explanation of the assessee and deleted penalty levied under section 271(1)(c).
Penalty cannot be levied merely because of differential rate of tax and mistake in advice ...
CIT v Yash International Inc. (ITA No. 4002 of 2013) dated 28.10.13 – HIGH COURT OF HIMACHAL PRADESH Background: The assessee firm formed a unit under the name and style of M/s Yash International having same partners as in the case of its erstwhile firm M/s Yash Electricals, Baddi. The assessee claimed deduction under section 80IC in respect of undertaking established in HP. The AO denied the deduction to the assessee on the ground that the assessee firm was formed splitting up / reconstruction of erstwhile firm. CIT(A) and ITAT allowed the benefit u/s 80IC to the assessee. Tax Authority’s arguments: The assessee and the erstwhile firm have same partners. Only the wife was introduced as new partner of erstwhile firm who did not contribute any capital except sharing of profit at the end of the year. The workers of M/s Yash Electricals were also shifted to the new unit. Control and management of the existing and new unit remained the same.